Circular economy & EPR compliance in India

Introduction

Circular economy & EPR compliance in India - Sustainability has moved from being an abstract concept in the corporate world of India to something that is increasingly gaining relevance and importance both legally and as a business strategy. With rising awareness of environmental concerns, the Government of India has increased its emphasis on the circular economy, a paradigm where minimal waste is produced, and there is an effective reuse and recycling of resources.

This shift is centred around the concept of Extended Producer Responsibility (EPR), which entails the responsibility of manufacturers in relation to the waste created by the end-of-life products that they manufacture. By the year 2026, EPR compliance is a critical aspect that companies need to be aware of when handling plastic packing materials, electronic goods, and tyres.

Circular Economy

In traditional terms, businesses in India operated on a linear model, which involves manufacture, consumption, and disposal of products. The goal of the circular economy is to transform such an approach to one where materials continue to be used through reuse, recycling, restoration, and recovery.

The idea behind the circular economy is rather straightforward: products/materials must circulate within the economy as much as possible without being disposed of in garbage dumps or the ocean. EPR is the legislative tool that obligates businesses to handle their products once they reach their end-of-life phase.

From a business perspective, the shift towards the circular economy calls for more environmental accountability of businesses concerning products sold and how their consumption impacts the environment. EPR has been developed specifically to address this issue by relieving local governments of some of the obligations when it comes to waste management and transferring the same obligations to the organizations introducing the products.

Extended Producer Responsibility

It is an environmental strategy where producers, importers, and brand owners (PIBOs) are responsible for collecting, recycling, or ensuring environmentally safe disposal of waste generated due to their products. This is achieved mainly through the functioning of the online portals set up by the Central Pollution Control Board (CPCB) and it is used as a central tool to control, regulate and govern the producers and to ensure the authorised disposal of waste. Companies who come under the ambit of EPR policies have to register themselves on these portals and meet their targets as stipulated by law.

Three categories of waste are placed at the centre of the whole policy change and the new system. These categories are-

1. Plastic Packaging EPR

1. In accordance with the Plastic Waste Management (Amendment) Rules 2022, producers, importers, and brand owners (PIBOs) engaged in the manufacturing and use of plastic packaging products are expected to register themselves on the EPR portal established by the Central Pollution Control Board (CPCB), report the quantities of plastics sold to market annually, and meet collection and recycling targets on a yearly basis.
2. Specifically, for 2024-25, the rigid plastic packaging recycling obligation was fixed at 50%, with an increase in percentage year-on-year to reach 100% by 2028-29. For the more difficult to recycle flexible and multi-layered plastic packaging (MLP), obligations include recycling and waste to energy targets, with co-processing options being considered if the former two cannot be fulfilled technically.
3. The central tool for compliance is the EPR certificate, which is obtained either directly via investing in an independent infrastructure for recycling, or indirectly by buying the required number of EPR certificates from other firms registered on the CPCB website. Such system has enabled the creation of a functional EPR credit market, although prices and scarcity issues still pose challenges.

4. E-waste EPR

5. The E-Waste Management Rules 2022 have seen India make a huge shift from its existing policies. All producers of electrical and electronic equipment (EEE), comprising 21 categories of equipment such as consumer electronics and computer hardware must register themselves on the CPCB website and achieve collection targets annually, which shall be measured in terms of percentage of the quantity of EEE they have put into the market in the previous two years.
6. Collection targets will progressively increase to reach 60% by 2026-27 and 70% by 2027-28. Importantly, for all collection and treatment purposes, producers can use only CPCB registered dismantlers and recyclers. Using any informal aggregator or an unregistered agent can disqualify a producer's compliance record, inviting penalties.
7. Importers are bound by the new rules for products that they sell within the country irrespective of manufacturing country. This leaves no scope for international brands selling through distributors based in India to escape compliance requirements. The new rules also extend compliance obligations to spare parts and components manufacturers selling to the EEE industry.

8. Tyre waste EPR

9. Historically, the disposal of end-of-life tyres in India has always been a problematic waste stream, either through illegal burning or informal shredding and storage. The End-of-Life Tyre Management scheme under the EPR rules, which was issued under the Hazardous and Other Wastes Rules and later made more stringent under the EPR guidelines, now mandates producers and importers of tyres to collect end-of-life tyres.
10. Tyres have to register with the CPCB, declare their production volume annually and undertake to get a prescribed proportion of end-of-life tyres collected and recycled by registered recyclers into applications like crumb rubber, tyre-derived fuel (under controlled conditions) and retreading. For the year 2025-26, the collection requirement would be 35 percent of production in the previous year, increasing every year thereafter.
11. The market for tyre EPR compliance is relatively less developed than that of plastic and e-waste. Therefore, those interested in entering the market must do a proper due diligence on the collection agencies to make sure they are legally registered with the CPCB.

Conclusion

By 2026, the EPR compliance issue will no longer be merely an aspect of sustainability within businesses in India; rather, it will become one of the key regulatory obligations that the organizations will have to fulfil.

Organizations that implement EPR compliance within their business and sustainability plans will find it easier to address regulatory requirements, minimize the risk of environmental damage, improve their ESG rating, and play a positive role in the development of the circular economy in India. EPR compliance, far from being viewed simply as a compliance requirement by progressive organizations, is increasingly seen as an opportunity to create a sustainable future.